Obamacare's Next Victim: Investment Bankers

One of the small businesses being hurt by Obamacare is a scrappy bootstraps investment bank in a suburb of Washington, D.C. where the median home sales price is $827,500. Thanks to the healthcare law, the bank won't be able to afford half of an average first-year analyst's salary a year from now. Not exactly the story that the Republicans are looking to tell.

On Tuesday, Politico highlighted the increasing concern for how Obamacare will affect small businesses. Under the Affordable Care Act, employer insurance policies need to meet minimum standards of coverage, in much the same way that individuals do. In some cases, employers will need to upgrade or change their policies; in other cases, employers will get more for their money. The extent to which either will happen isn't yet clear.

But no reason to wait on the horror story anecdotes! On Saturday, USA Today ran an opinion piece from small-business owner Susan Gabay, who argued that her company was already seeing premium increases that affect her business.

This calls into question another of the Affordable Care Act's promises — that it won't hurt hiring. ...

My firm, which has fewer than 20 employees, recently received our renewal package for next year's health insurance plan. It read: "Your current coverage is no longer being offered, but we've provided you with a great alternative" — an estimated 48% increase in premiums.

Nor are her employees getting better coverage, Gabay writes: the out-of-pocket maximums have increased (though the co-pays have dropped).

Gabay, a footnote on the article notes, is managing director of Bluestone Capital Partners, an investment bank located just outside of Washington, D.C., that does corporate finance transactions "in the aerospace/defense, information technology, and technical and professional services markets." When people think small business, they usually don't think of boutique finance outfits that are managing up to $100 million in assets. (Bluestone founder John Allen rather unsurprisingly was a donor to Mitt Romney.)

But Gabay's critique includes a number of question marks of its own. For example, those added costs don't kick for her until next year, since her company renewed its policy before a December 1 cut-off. Nor is her firm required to provide coverage, as it falls under the 50-employee threshold (though obviously it's good that it does).

Then there's her firm's actual added cost. The increase, she writes, "translates into approximately $1,676 in added costs per year for every individual covered on our plan ($6,704 for a family of four). That's approximately $44,000 in added annual costs that could otherwise be used to hire a college graduate."

To do what? According to WallStreetOasis.com, first-year analysts at investment banks earn between $70,000 and $150,000 a year. There are probably positions at Bluestone that come in under that level, we assume, but Gabay's claim that the increase will "hurt hiring" seems as though it probably won't mean 44 fewer employees. Hopefully not even two fewer; the median household income in McLean, Virginia, where Bluestone is based, was $164,888 in 2010.

The point isn't Gabay, who is almost certainly actually concerned about Obamacare. It's using columns like Gabay's as shorthand for opposition to the policy — a policy which, as Politico points out, will have as-yet-unclear effects on small businesses.

"Academic exercises and empty rhetoric are the antithesis to success," Gabay's piece begins, an argument somewhat at odds with a press release from Bluestone trumpeted that the firm would be a "ThinkBank," to offer innovative ideas to investors. But it's undermined far, far more by the rest of her op-ed itself, given that Gabay extrapolates from her own example to suggest that the change in coverage and policy costs is "the equivalent of a 23% across-the-board individual income tax increase" for the entire United States. This is a number so completely unmoored from any demonstrable evidence as to provide a master class in why anecdotal evidence shouldn't be used in policy-making. (It also seems risky for a finance company to willfully inflate dollar amounts to make a point.)

Gabay's column demonstrates a key flaw in the Obamacare debate: the embrace of taking a reported bad thing and massaging it into the apocalypse. Anecdotes, it's worth remembering, always say more than you hope and less than you'd expect.